The first question home buyers want to know generally revolves around how much mortgage money they can borrow or get qualified for.
Simply looking on a search engine for “Mortgage – how much can I borrow” will more than likely only produce a bunch of mortgage calculator results vs real information that describes the entire process.
While an online mortgage calculator may be a decent tool to use as measurement, there are several other factors that play a part in a full mortgage approval.
Banks look at a few things when qualifying a borrower for a new mortgage:
The most common measure of a borrower’s credit standing are the three scores which can range between 300 and 850.
A minimum 620 fico score is required for most FHA lenders, and anything higher may increase your chances of getting approved with a lower rate.
There is other criteria that banks look at regarding a borrower’s credit standing, such as payment history, total balances and limits, type of credit borrowed, and recent inquiries.
Since mortgage rates are also tied to credit scores on some loan products, knowing where you stand or how to improve this rating could make a significant impact on your monthly payment.
- Debt-to-Income Ratio
The (DTI) is calculated by dividing a borrower’s total monthly liabilities (minimum credit payments, auto loans / leases, child support, mortgage payments…) by the verifiable monthly income.
* Verifiable income includes pay stubs, W2’s, Tax Returns, and in some cases 1099’s and bank statements.
Current liabilities + new mortgage payment = $1,500 a month
Gross Monthly Income of $3,500
The DTI would be 42%.
Most mortgage guidelines require a 45% or lower Debt-to-Income ratio.
The (LTV) is calculated differently depending on whether the new transaction is a purchase, refinance, or rehab loan.
Basically, it is the amount of the new loan in comparison to the total value of the property.
When qualifying for a Las Vegas FHA loan on a purchase, a 3.5% down payment would equal a 96.5% LTV.
Keep in mind that banks will verify a paper-trail of the assets used for the down payment, so it is important to communicate with your loan officer about your current financial position.
There are a few factors to consider when deciding on the amount of your new mortgage:
1. Desired Down Payment
2. Budgeted Monthly Payment
3. Length of time you want to own the property
Updated Clark County Nevada lending limits will also play a role in determining the type of mortgage program and amount you are qualified for.
Since Las Vegas mortgage rates may also have an impact on your monthly mortgage payment, it is important to pay attention to the market.
Schedule a strategy session with our professional Las Vegas Mortgage staff by phone or at our office to discuss the best lending solution for you and your family.